The US property market has remained in a moderate state of decline over the last month; many analysts are now suggesting that an outright collapse is currently an unlikely situation, and instead homeowners will see a correction in house prices as opposed to a softening of the property market as a whole.

Some tentative signs of stabilization have recently appeared in the housing market: New and existing home sales have flattened out in recent months, and mortgage applications have picked up.

However, even if housing demand falls no further, weakness in residential investment is likely to continue to weigh on economic growth over the following year as homebuilders seek to reduce their inventories of unsold homes to more-comfortable levels.

Many homeowners are unlikely to witness much appreciation over the following year or so and home values will fall in some cities and communities.

Despite the ongoing adjustments in the housing market, overall economic prospects remain positive. Household finances appear solid, with delinquency rates on most types of consumer loans and residential mortgages remaining low.

However, the exception for this is the sub-prime mortgage sector, those with variable interest rates, for which delinquency rates have increased considerably.

The Federal Reserve has again maintained interest rates at 5.25%; there is an underlying concern whether the possibility of a slowing in economic growth may have worse repercussions than higher levels of inflation. However, for the meantime at least, the Fed has chosen to focus on containing inflation. Inflation, as measured by the Consumer Price Index, is expected to be 2.2 percent 2007, down from 3.2 percent in 2006.

The IMF has forecast US GDP growth at 3.3% for the first quarter of 2007.